Younger generations today have a raw deal when it comes to money, faced with student debt, sky-high house prices, and now the economic fall-out of the pandemic. Despite these challenges, Gen Z and younger Millennials are determined to take control of their money.
Studies have shown that rising numbers of young people have been drawn to investing over the last 18 months, driven by having more spare time and fewer expenses. Gen Z have come of age at the same time as the fintech revolution, making financial products and services more accessible than ever. But while increased financial engagement amongst young people is a positive step, there is a danger that some young people are diving in without fully understanding the risks. In fact, research by the U.K.-based Financial Conduct Authority found that 45% of young investors do not view losing money as a potential risk of investing.
“Because FinTech has accelerated so much in the last 10 years, finance is so much more accessible,” said Andy Ayim, Founder of The Angel investing School. “Which is great on the one hand, but on the other hand, there is a massive knowledge gap. We saw that with the GameStop scandal and with bitcoin. People talk about the outliers who made enormous returns, but there is also a long tail of people who lost money that they couldn’t afford.”
Enter ‘Finfluencers’
Unlike previous generations, young investors are skipping the investment books and financial advisers, and turning to so-called Finfluencers and social media to fill the gap. The Edelman Trust Barometer found that 63% of respondents aged 18-to-34 trust what an influencer says about a brand more than what the brand says about itself – and this is no different in FinServ.
“Consumers don’t intuitively trust big financial firms,” said Nicholas Wright, Chief Marketing Officer EMEA at Blackrock. “So, there is significant upside in reaching those that are investing for the first time through influencers. That’s why getting onto social media in a much more strategic way is so important.”
An Opportunity for Financial Brands?
The popularity of social media and influencers is a wake-up call for traditional FinServ brands, which are in danger of becoming irrelevant to younger audiences. With tried and tested marketing techniques, such as advertising, becoming less trusted amongst this age group, brands have an opportunity to tap into influencers to engage with younger audiences in a language they understand, while also ensuring they are fully informed.
“Gen Z and Millennials are going to social media to research what they should do with their portfolio, and it’s important that financial services brands provide the right kind of information to them as they are making those decisions,” said Megan Farmer, Executive Director, Head of Social Media at JP Morgan.
Balancing Entertainment and Compliance
Financial marketers have been understandably nervous about dipping a toe in the social media and influencer water, concerned about regulations, reputational risks, and maintaining their brand image. But there are lots of ways that brands can leverage these channels while keeping stakeholders and regulators happy.
For example, more traditional firms may prefer to work with influencers that are genuine financial experts who combine the right expertise with an ability to create entertaining content. Or they could opt for partnerships with non-financial influencers but focused on content related to their own life experiences so that influencers aren’t directly providing advice and talking in a way that is easily relatable to younger audiences.
“We’re seeing pages pop up like Mr. MoneyJar and Money Medics, which compare Pokémon to money, or a box of sweets to stocks and shares,” Ayim explained. “But that is what relates to people, that human touch. You’re speaking directly to me, about me, about things that I can relate to, in a safe space where we can have this discussion.”
Influencers don’t have to be external to your organization either. Leading FinServ brands are increasingly using their employees as online advocates by providing them with informative and entertaining content to share with their networks. Again, the key is being creative and developing content that aligns with the values of the organization and topics that employees care about so that they are motivated to share it authentically.
“Our employees are our advocates,” Farmer said. “They can say what we’re saying with a much more authentic voice. That piece about empowering your employees with the right message and how they should share it, while remaining compliant, it is a big piece of education, but also ensuring your message gets out to the right audience.”
Generation Z and Millennials may not hold the purse strings now, but it won’t be long before they do, and how they manage their money will shape the financial landscape of the future. Just as fintech has moved into the mainstream, finfluencers will too, and for FinServ brands, they hold the key to winning over tomorrow’s investors.
To read more about how marketers can bring fresh thinking to FinServ, check out our guide to Marketing Without Compromise. Also, subscribe to the LinkedIn Marketing Solutions blog to keep up with the latest trends in FinServ marketing.
